Member Info for LunaNera

Stoodio. SP @6p? Yes please!

Here are the relevant sources

https://www.glassdoor.co.uk/Reviews/THG-hut-group-Reviews-EI_IE802179.0,3_KH4,13.htm

https://uk.trustpilot.com/review/thehutgroup.com

https://www.msn.com/en-gb/news/uknews/hut-group-cancelled-2011-flotation-after-multimillion-pound-fraud-was-uncovered/ar-BB18Iwud

Claiming a company founded in 2004 a startup is stretching it a bit...

The end indeed.

I'm afraid it won't.

Having looked at the company pre-IPO, it sports a rather aggressive culture in a toxic atmosphere, pitting employees against each other. Given this awful work environment, it is not surprising that a previous attempt to float in 2011 due to fraud allegations, leading to high profile resignations (I am surprised nobody went to jail for this). When you read the sequence of events, bribery is also something that comes to mind rapidly.

Customer service is abysmal. Have a look at it's Trustpilot rating. In retail, poor customer service will erode a customer bases rather quickly.

Most of their other brands don't turn a profit either. Myprotein is what keeps this business afloat.

On the technical aspects the performance is wanting. Their technology is largely unreliable and plagued with defects.

None of this suggests that they have the competence to become the next Amazon. The next Enron more likely.

> No US listing or YPF win - £11 Min.

Yep. That's the model I used. It assumes a growth rate in step with the NOS average rate of inflation and a 50% margin of error. I would quite appreciate sentiment remaining low for a while in order to expand that position further ;)

Not sure why everyone wants the price to go up. For as long as it remains underrated it is a rather good proposition.

Patience.

And therein lies the opportunity for us little ants for some time to last ;)

Eventually that Woodford bashing -- which looks increasingly cheap -- will stop. Then it's back to the fundamentals of the business. Current price indicates a 1-2% growth together with a 50% margin of safety.

One has to make the call as to whom to agree with.

Burford is at to top of the pile in litigation finance and is taking on bets few are able to take on. The risk I can see thus far is that there is a capacity risk should key members of staff leave. As far as being able to make a 30% roi on cases which are more or less concluded not being a good proposition? Be my guest.

Although I can see the potential of this rather novel sector in finance, patience is what I'm afraid will be necessary.

Criticism, even when unjustified, requires a track record to rebute it. And criticism there was plenty.

Not that I would not welcome it, it is essential. But it will take time for a level of confidence to establish itself. To the enterprising investor, this can indeed provide a welcome opportunity to build a substantial position (alas, not without risk -- novel implies this).

A shift in how this business is seen will require some consistency in results. These don't come lighthanded, they will need time time to establish.

From my experience, innovators are always scrutinized and attacked. And that's a necessary gauntlet they need to muster. Look at Steve Jobs and you have plenty of precedence.

I would be (positively) surprised if perception would suddenly evaluate their proposition correctly. A time frame of 3 years is something I am expecting.

It depends on ones views as to the prospects and future of Burfords approach. Taking into account the relative immaturity of this industry, further disruptions are likely (risk).

I'm afraid this is a position that needs rather close monitoring and investment of time to understand it. In the short term I would not be so up beat about favourable assessments. In the long term I would expect a rather solid business emerging.

There are a lot of complications when moving to SEC regulated territories. A lot of the regulations as towards independence of audiors are a lot tighther. This could involve moving to a different auditor all toghether. Do not underestimate this complication.

Arguably, the paperwork can be done within weeks. But that's assuming that all the other boxes are ticked. They never are and the current delays we face across all industry sectors don't help as far as timing is concerned.

Patience.

Meanwhile, let the management run the company and work towards establishing these claims as an asset class. Very novel and thus by default, speculative. I can see the upside and the beneifits and am prepared to give it it's time.

Are you?

No position as of yet. It's high on my list though. I do like a lot of the fundamentals and the fact that the CEO is paid modestly. Liquidity in this security isn't great though (ie volume). That wouldn't stop me taking a position, but it's a consideration. Entry points are never well timed (when they are, it's luck). As long as I can see it trading below fair value and with a healthy margin of error accounted for, then it's a buy regardless of what I may think about optimal entry points. For what it's worth, it takes me about 6 months to actually pull the trigger.

One needs to support a company (i.e. purchase stock) for the right reasons. Failing that one is at the whim of market calamities.

Litigation finance is a rather novel aspect in the leagal world. The muddy waters are as to whether the claims are truly an asset class or fantasy. The jury (pun intendet) is still out on that one.

So there will be a lot of adjustments necessary to have claims recognised as an asset class. Asset class would imply some intrinsic value and Burford, amongst others, argue this case. Alas, this is yet to be established. Thus such enterprises remain in the speculative domain and this is why there exists such a broad range of opinions thereof.

Every stakeholder should apply critical thought as to the future of this business and understand its speculative nature and balance their portfolios accordingly.

For what it's worth, my estimates indicated that any dip below my estimates below intrinsic value indicates a good opportunity to purchase a good business at a discounted value. Whether you agree with that or not, is ultimately ones own responsibility.

As to the prospects of share price (I don't intend to liquidate for as long as I can see favourable criteria being met), I would expect quite some volatiliy as to how to this intrinsic value is perceived.

l am long BUR but I would caution patience towards the realisation towards the value their portfolio and business prospects.

I would expect their reliability to remain in the speculative domain and it should definitively be treated as such. Over time it should tell whether litigation finance will become a reliable asset class or not.

Until then, expect lumpy results and strong sentiment.

No luck to anyone. Use your head.

On my part I quite like the fact that they focus on establishing this rather novel industry of litigation finance. It is not everybody's cup of tea. Companies with such a short track record are in the enterprising pile, which means my maximum allocation is 10% in my portfolio.

For my part, I don't think that their business model is broken. Litigation finance is here to stay and law will hopefully stay as well.

However, I don't mind listening to the bear case since it always provides for an interesting point where one can reflect further. Its a great opportunity to learn more about the business.

I do however, wonder why so many people went in at such lofty premiums. Even a very simple valuation on the "back of a fagpacket" would have prevented a lot of upset.

If management would be able to control the share price, then they would be guilty of market manipulation. Let that sink in.

I can fully understand why some would never take a position in Burford. That's perfectly OK. What is not acceptable is if I would accuse them of being fake and a fraud, simply because they disagree with my opinion.

For some it's time to man up and admit that they made a mistake and had no idea what they were doing. That happens. But it does not give anyone a "carte blanche" to abuse others.

Try this

https://associationoflitigationfunders.com/litigation-finance/

Look at the members directory. This (new) industry needs regulation to calm things down. So they are pushing for this.

ym43, stop being a toxic bully pls.

There will be plenty of opportunity. Provided we don't face loss of principal, BUR are set for a slow recovery. It will take a series of results for confidence to return and the company to be noticed. In the meantime, let's enjoy the 'value compression'.

Like previously mentioned in the 'private' thread. This climate will present a lot of interesting opportunities for expanding BURs portfolio.

I would not expect a substantial change within three years time. It could however, literally explode upwards. Unfortunately, these things are impossible to time.

Time will tell...

Corporate clients already quarrels about contracts. Many don't want to stick to their contracts or default on their terms. I would think that there are quite a lot of issues that will need to be settled in court. I don't have a specific idea on how it will impact the BUR portfolio, but I would not be surprised if we see an overall spike in litigation going forward.

Initially it was meant to be a Brexit play. As it turns out, it may prove a nice play on the current situation as well.

I'd hold indeed.

Berenberg estimated the NAV (or intrinsic) value at 616p, suggesting a price target of 810p with a rating of Buy.

https://www.lse.co.uk/news/berenberg-upgrades-burford-capital-to-buy-cvheks3fehuizl8.html

That figure used rather pessimistic assumptions too. Positively surprised that their figure of 616p is not too far off from my estimate of 613p as discussed earlier.

Shows the usefulness of Ben Graham's formula.

Thanks for sharing your thoughts Yuri. Very good points.

Moodys rates their financial outlook rather strongly.

"Burford maintains a strong capital position to buffer asset and earnings volatility that stems from its litigationinvestments. The company's ratio of tangible common equity to tangible managed assets was 60% at 30 June2019, well above the average for other specialty finance subsectors. By maintaining high cash balances,employing low leverage and effectively laddering debt maturities, Burford also maintains a strong liquidityprofile."

https://www.burfordcapital.com/media/1658/moodys-30-october-2019.pdf

Provided one can trust Moodys (one usually can), then the company has no liquidity issues. Results are expected to fall in line with their recent trading update.

https://otp.tools.investis.com/clients/uk/burford_capital2/rns/regulatory-story.aspx?cid=1377&newsid=1362341

Cheers Littlepost.

If you prefer videos, I recommend

https://www.youtube.com/watch?v=npoyc_X5zO8

and

https://www.youtube.com/watch?v=vFrgdvFKGVU

naturally, reading the books is also a very good idea.

No problem. It's fair comment and no criticism.

The 'Graham formula' I employed, was from his teacher at Columbia. There is a lot more work to be done rather than looking at simple valuation ratios indeed.

If one cannot understand what's going on then one should give it a pass. That's very good advice.

I am not here to tutor about the basics of value investing, but wanted to steer the conversation more onto business fundamentals and actually what the company does rather than 'I think the share price is going to go up today', 'why has the share price not gone up', 'i think the full moon will impact earnings soon' etc...

There is a reason why I pointed to a link helping people understand what the accounts can be like. It is important to be in a business for the right reason, not for the 'bigger fool theory'. It is up to each individual and then decide.

All this was to help you make a decision instead of feeling pain because of market sentiment.

Whatever view you take, I'll be fine with that.